Market Environment
- Japan was the best performing market in Asia as well as globally in the first quarter. During the period, the Japanese equity market surpassed an historical peak set back in 1989 thanks, in part, to capital efficiency reforms that have triggered higher dividends and more buybacks and encouraged inflows from global investors.
- At the same time, Japanese companies are delivering robust earnings and we think Japanese corporates are in a good place as we anticipate U.S. interest rates coming down this year which will be a boost to global economic growth. In addition, Japan's technology sector is benefiting from the global uptake in generative artificial intelligence (AI) technology.
- In March, the Bank of Japan made a major decision to end its negative interest rate policy in a signal to investors that Japan's growth momentum is real, yet monetary policy is set to remain accommodative.
Contributors and Detractors
- For the quarter ended March 31, 2024, the Japan Fund returned 15.3% (Investor Class) and 15.31% (Institutional Class) while its benchmark, the MSCI Japan Index, returned 11.16% over the same period.
- The top three contributors to relative performance, on a sector basis, were consumer discretionary, industrials and health care due to stock selection. The top three detractors to relative performance were materials due to an overweight allocation, financials due to an underweight allocation and energy due to zero allocation.
- The three largest contributors to absolute performance during the quarter included Tokyo Electron (TSE:8035, Financial), a semiconductor production equipment company, Mitsubishi Corp. (TSE:8058, Financial), a trading company, and Isetan Mitsukoshi Holdings (TSE:3099, Financial), a department store operator. The top three detractors to performance included Nissin Foods Holdings (TSE:2897, Financial), a producer of instant noodle and processed food products, OBIC (TSE:4684, Financial), an IT company mainly engaged in software, and Toppan Holdings (TSE:7911, Financial), a printing company.
Outlook
- The Bank of Japan's recent decision to end its negative interest rate policy is a key signal to investors that for the first time in a long time the central bank sees a growth momentum taking hold and that it is prepared to be relatively dovish. As we look ahead, we may see Japanese equities consolidating but over the longer term we believe Japan is a very good opportunity, as capital efficiency reforms entrench and earnings remain robust.
View the Fund's Top 10 holdings as of March 31, 2024. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MJFOX as of 03/31/2024
| 1YR | 3YR | 5YR | 10YR | SINCE INCEPTION | INCEPTION DATE |
|---|---|---|---|---|---|
| 25.82% | 0.58% | 6.94% | 7.30% | 6.08% | 12/31/1998 |
All performance quoted is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund's fees and expenses had not been waived. Please see the Fund's most recent month-end performance.
